Throughout this paper, the ESA region will comprise the following 22 countries: Angola, Botswana, Burundi, Comoros, Democratic Republic of Congo, Eritrea, Ethiopia, Kenya, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, Rwanda, Seychelles, South Africa, Swaziland, Tanzania, Uganda, Zambia, and Zimbabwe.

Middle-income countries are defined by the World Bank as those with a 1998 per capita GNP of between US$760 and US$9,360.

The trade restrictiveness index is a modified version of the one used in Sharer and others (1998), and is based on a classification system for nontariff barriers and for import and export taxes (sec Appendix I).

For example, in the case of South Africa and its partners in SACU, the maximum tariff was 1,389 percent, there were more than 13,000 tariff lines, and the effective protection ranged from—411 to 189 percent. While extreme. South Africa’s case was not atypical, as Malawi, Mauritius, and Ethiopia also had highly distorted tariff structures.

Of the 22 countries in the ESA region, 14 had programs with the IMF during the 1990s. The SACU countries (excluding Lesotho), Angola, Eritrea, Mauritius, and the Seychelles did not have programs with the Fund (see Appendix II, Table A2).

While some countries—Zambia, for example—embarked on a liberalization program that encompassed both tariff and nontariff barriers, some of the other reformers, such as Tanzania, gave priority to the elimination of nontariff barriers and reduced tariffs at a later stage.

Tentative evidence derived from developments in tariff collection ratios and a categorization of countries on the basis of the Sachs-Warner criterion suggest that the gap between ESA countries and the rest of the world has narrowed considerably since the late 1980s (Appendix II, Table A3).

Specific revisions to tariff schedules may have prevented reductions in effective protection for important sectors of the economy. In the case of South Africa, the top rate of effective protection increased from 189 percent at the beginning of the decade to 204 percent in 1998, despite the overall trade liberalization achieved during this period.

With the notable exception of the SACU, which had applied 72 tariff bands by end-1998.

Zambia and Mozambique have also moved closer to Article VIII status in 1999. However, capital account liberalization has not featured prominently in the reform agenda of most countries in the region. Except for Mauritius, Uganda, and Zambia, several capital account controls are still in place in most countries.

Including exemptions on imports by nongovernmental organizations and those financed by foreign donors, which usually cover a large part of total imports.

In Mauritius, the share of exempted imports in total imports increased by about 10 percent during the 1990s. In Tanzania, the scope of exemptions has also increased in recent years, as evidenced by the rise in the ratio of forgone revenue relating to exemptions to total import taxes assessed (including exemptions), from 24 percent in 1993 to 48 percent in 1997–98. In Mozambique and Zambia, the authorities have emphasized recently the use of discretionary exemptions in an attempt to promote foreign investment.

See, for instance, Rodrik (1998).

Zambia introduced an across-the-board 5 percent import declaration fee in 1995 for fiscal reasons, which was eliminated in 1998. Also, an import ban on wheat flour, introduced in 1997, was lifted in the following year. The 10 percent export levy on tobacco, tea, and sugar introduced by Malawi in 1995 for fiscal reasons was eliminated in 1998. In Tanzania, some of the tariff increases in creases in 1992 were reversed during See. for instance, Rodrik (1998).

Binding represents a legal commitment by a country not to raise tariffs above a specified level. If a binding is breached by a country it has to compensate partner countries or face retaliation by them.

Computed as H_i, = Σ_j=1,…S(S_j/Σ_j=1,….SS_j)², where S_j is the sum of deposits and loans for bank j. As defined, the index equals one in the case of a monopoly and 0 in the case of equal shares. An index value higher than 0.3 is normally associated with an imperfect market structure.

The liberalization index corresponds to the bound rather than the applied level of access, and, therefore, does not necessarily correlate with how liberal actual conditions are.

Tanzaiiia will withdraw from COMESA effective September 2000.

Angola, the Democratic Republic of Congo, and the Seychelles are the only three countries that are not signatories of the protocol, though Angola and Seychelles have signaled Their intention to accede to it in the near future.

ESA countries that are net importers of foodstuffs could also be affected by the increase in prices brought about by the reduction in subsidization of agricultural products. This increase is, however, expected to be small.

These preferences stem from various arrangements between industrial countries and ESA countries, such as the Generalized System of Preferences between the European Union. Japan, and the United States, on the one hand, and developing countries, on the other. There are also the Lomé Convention, involving the EU and several low-income countries, including ESA countries, and others, such as the Multi-Fiber Arrangement, under which several ESA countries have special quotas for the export of textiles and clothing products.

Tariff escalation is a phenomenon whereby tariffs increase with the stage of processing.

This result is based on Yeats (1998) and covers eight ESA countries for which reliable data are available at a disaggregated level. The countries are Kenya, Madagascar, Malawi, Mauritius, South Africa, Uganda, Zambia, and Zimbabwe. The non-ESA sub-Saharan African countries covered are Benin, Burkina Faso, Cameroon, Gabon, Côte d’lvoire, and Senegal.

According to Amjadi and Yeats (1995), net payments on freight and insurance by sub-Saharan African countries were in 1990–91 equivalent to about 15 percent of exports of goods and services, more than twice as high as in other developing countries. In landlocked countries such as Malawi and Uganda, the ratio was well above 50 percent.

The single-product and three-product concentration ratios measure the share of total exports accounted for by the largest and the three largest export items, respectively.

The following variables are analyzed: GDP growth, GDP per capita growth, growth in export volume, inflation performance, the fiscal balances, the current account balance (the latter two excluding grants and expressed as a share of GDP), and indicators of trade revenue dependency. The Democratic Republic of Congo and Eritrea are excluded from the analysis because their macroeconomic data are either unavailable or highly distorted by the recent wars in these countries.

In virtually all cases, those countries that had open trade regimes in 1998 were also the ones that undertook the most liberalization since the beginning of the decade.

The BLNS countries are excluded from the analysis here because their “trade taxes” largely represent transfers from South Africa under the revenue-sharing arrangements in SACU.

The African Growth and Opportunity Act, enacted by the U.S. Congress in early 2000, provides for duty-free treatment of the exports of sub-Saharan African countries to the United States. The magnitude of benefits to these countries, especially in relation to textiles and clothing products, will be determined by rules of origin requirements that need to be fulfilled to qualify for duty-free access. An interesting feature of the Act is that it envisages the possible negotiation of free trade agreements between the United States and African countries in the future.

Tariff escalation is significant for many product chains relevant to sub-Saharan African countries, such as wood products, textiles and clothing, fish, and leather products (Amjadi, Reinke, and Yeats, 1996).

Pre-Uruguay Round tariffs facing sub-Saharan African countries’ exports to the EU. United Stales, and Japan averaged only 0.31 percent, less than for any other group of developing countries (Amjadi, Reinke, and Yeats. 1996).